The Puerto Rico Oversight Board holds its fourth official meeting Saturday, faced with a disagreement with the new governor over what should be in the commonwealth's 10-year fiscal plan and escalating discord among local politicians.
The board, created last year under the Puerto Rico Oversight, Management and Economic Stability Act to help the island government boost the economy and deal with a $69 billion debt burden, is meeting for the first time since Nov. 18, which was before Ricardo Rossell- was elected to succeed Alejandro García Padilla as governor.
PROMESA requires the creation of certified minimum five-year fiscal plan that would, among other things, provide a balanced budget to the commonwealth, allow the commonwealth to regain access to the capital markets, fund essential public services, fund pensions, and achieve a sustainable debt burden.
In a letter on Jan. 18 the board called for a combination of tax increases and spending cuts equal to 44 percent of the island's general fund. Rossell- responded by rejecting the demand and called for a more moderate approach.
Starting at 8:30 a.m. Atlantic Standard Time the board will present the fiscal plan targets associated with its letter, will discuss fiscal plans for Puerto Rico's government and its authorities and public corporations, learn about the government' liquidity level, and discuss the governor's request for extensions on the deadline for the fiscal plan and lawsuit stays.
The planned Saturday meeting will be in the same resort hotel that it held its Nov. 18, session. During the colder months of the year, Puerto Rico is an hour ahead of Eastern Standard Time. The meeting will be streamed live on the board's web site
According to the previous governor's representative to the board Richard Ravitch and to the El Vocero news web site, the board has held at least two private meetings since Nov. 18, even though PROMESA forbids it from meeting privately without voting to go into executive session. The board has never voted to go into an executive session.
As the board is planning what to do about Puerto Rico's public sector debt, Rossell- took a step Thursday to give him powers to deal with the $69 billion burden. On April 6, 2016, García Padilla approved the Moratorium Act. This act claimed to give the governor the power to suspend debt payments. It extended to Jan. 31.
The substitute measure that Rossell- signed, the Puerto Rico Financial Emergency and Fiscal Responsibility Act, "is intended to facilitate and encourage a voluntary process under PROMESA between the governor and/or the Puerto Rico Fiscal Agent and Financial Advisory Authority … and the creditors of the government of Puerto Rico," in the words of the act.
The act states that it "is inappropriate to categorically prioritize the payment of non-debt expenditures over debt service. Rather, during the emergency period, the governor shall pay debt service to the extent (a) possible after all essential services of the Commonwealth of Puerto Rico have been provided for; or (b) ordered to do so by the Oversight Board or any other board created under federal law."
During the financial emergency, the act gives the right to the governor to establish priorities for the disbursement of public funds. It also gives the governor broad powers to deal with the Government Development Bank for Puerto Rico.
In a tweet on Thursday, Puerto Rico House of Representatives member Manuel Natal Abuelo said because of Rossell-'s new law, the Puerto Rico Fiscal Agent and Financial Advisory Authority and the Oversight Board would be negotiating with Puerto Rico's creditors in private. Natal Abuelo is a member of the opposition Popular Democratic Party.
Natal Abuelo has also been fighting against Rossell-'s dissolution of the Puerto Rico Commission for the Comprehensive Audit of the Public Credit. The commission, founded in 2015, has questioned the legality of much of the debt the commonwealth issued. It was planning to systematically look at bonds.
Rossell- issued a statement on Tuesday dissolving the commission. Natal Abuelo responded by saying the legislature had set it up and that therefore the governor couldn't dissolve it. Puerto Rico Senate minority leader Eduardo Bhatia Gautier also denounced the governor's move.
In another development, the governor signed his labor law reform bill into law on Thursday.
"In the last 10 years we have lost almost 300,000 jobs and this has caused a bunch of Puerto Rican brothers to move to Florida and other jurisdictions looking for work and a better quality of life," Rossell- said. "It's time to stop the migration and separation of our families by creating the jobs that are in states like Florida here in Puerto Rico."
